From ambitious teens taking
on the world and tech pioneers breaking
boundaries to maverick slum dwellers dreaming
big and trailblazing innovators tackling
social problems, CNN's African Start-Up has been following the efforts of the
continent's innovative and determined entrepreneurs to make their business
dreams become reality.
Indeed, all across the continent, a growing wave
of grassroots self-starters are taking risks and defying obstacles to bring
their money-making ideas to life. Armed with a can-do attitude and hopes of
striking it big, they're navigating a conundrum of challenges to pursue
opportunities at a time when many African countries enjoy unprecedented levels
of economic growth.
"The entrepreneurial landscape in
sub-Saharan Africa is absolutely excellent," says Mike Herrington,
executive director of Global Entrepreneurship Monitor (GEM)
and professor at the University of Cape Town in South Africa. "It's on the
increase because Africa, at last, has been emerging and the economies are
booming -- several countries are starting to really increase entrepreneurial
activity and move to opportunity entrepreneurship, rather than necessity
entrepreneurship," he adds. "Opportunities abound and a positive
spirit is emerging amongst the population of these countries."
So, Africa's entrepreneurial spirit is alive and
thriving -- but how does it compare to the rest of the world?
Earlier this year, GEM published its annual report looking
at the state of entrepreneurship globally. It found that sub-Saharan Africa is
the region with by far the highest number of people involved in early-stage
entrepreneurial activity (TEA), with Zambia and Nigeria leading the world
rankings.
It's a woman's world
Africa also leads the world in the number of
women starting businesses, with almost equal levels of male and female
entrepreneurs. In fact, in countries like Ghana, Nigeria and Zambia the women
outnumber the men.
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Source: Global Entrepreneurship Monitor 2013 Global Report
INEZ TORRE/CNN
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Overall, the continent has a much higher
proportion of female entrepreneurs compared to other regions, with Nigeria and
Zambia (both 40.7%) coming on top and countries like the United States (10.4%),
the UK (5.5%), Norway (3.6%) and France (3.1%) lagging far behind.
According to Herrington, the main reason for
this is because women in Africa "need to earn an extra income" to be
able to afford "to send their children to school."
Getting off the ground
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Source: Global Entrepreneurship Monitor 2013 Global Report
INEZ TORRE/CNN
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Yet, does the high number of both male and
female entrepreneurs tell the whole story? And do these impressive figures
translate to sustainable startups that are able to grow and provide employment
to the continent's young population?
Factor-driven
economies are mainly based on low-skilled labor and national resources. By
comparison, efficiency-driven economies develop more efficient manufacturing
processes and increase product quality, while innovation-driven economies are
engaged in the production of new products by combining sophisticated
technologies with a high-skill workforce and research.
In its analysis, GEM groups countries into
geographic regions, but also according to their development stage:
factor-driven, efficiency-driven and innovation-driven, each suggesting an
increasing level of sophistication in the operation of the economy (see fact
box on the left).
Most African nations surveyed are placed into
the factor-driven stage, where early-stage entrepreneurial activity rates tend
to be higher than the rates of owner-managers in established businesses
(running more than three and a half years).
In other words, "a high entrepreneurship
rate does not necessarily mean the creation of a lot of jobs," explains
Herrington. "Those countries with low GDP per capita tend to have a very
high entrepreneurial rate, because the larger corporations are not taking up a
lot people to provide them with the so-called formal employment," he adds.
Calling it a day
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Source: Global Entrepreneurship Monitor 2013 Global Report
INEZ TORRE/CNN
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Similarly, the continent might be buzzing with
startups, but how long do these last?
According to GEM, the rate of business
discontinuance tends to decrease as economic development increases. As a
result, countries like Malawi and Angola that see many new businesses also
experience high numbers of people abandoning their efforts after failing to
make profits.
"The discontinuance of businesses in the
factor-driven economies is very high," says Herrington, citing "the
lack of education, market research and access to funding" as the main
reasons.
Fearless entrepreneurs
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Source: Global Entrepreneurship Monitor 2013 Global Report
INEZ TORRE/CNN
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There are several factors hindering the survival
and growth of small businesses in Africa -- little government support,
bureaucracy and lack of financial backing to cite a few more. Yet, all these
constraints do little to prevent the continent's budding entrepreneurs from
trying their luck.
True, entrepreneurs
might be optimistic by nature, but nowhere else in the world is this key drive
toward success as present as in Africa.
The continent's entrepreneurs boast the lowest
levels of "fear of failure," with just 24% responding that it would
stop from starting a business and seizing business opportunities. In countries
like Zambia, Uganda and Malawi the figure drops to as little as 15% -- compare
that to countries like the UK (36.4%) and the United States. (31%).
All you need is confidenc
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Source: Global Entrepreneurship Monitor 2013 Global Report
INEZ TORRE/CNN
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It's no surprise then that African entrepreneurs
are also the most confident in the world in their ability and skills to start a
business. In comparison, people in Malawi feel twice as self-assured about
launching a startup as those in the UK.
Likewise, sub-Saharan Africa claims the top five
spots for countries where people see good opportunities for starting a business
and feel positive about entrepreneurship.
Herrington says that it's these qualities,
coupled with a need for better education and a focus on moving entrepreneurs
from necessity to opportunity, that will drive the continent's development.
"Africa is going to have to rely on small
businesses (SMEs) to provide the bulk of the employment," he says.
"In a lot of countries the SMEs contribute more than 50% of the GDP and
more than 50% of employment, so if you're going to employ people in Africa and
other developing countries it's SMEs are the ones that are going to provide
that."
From CNN
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